For Many Small Businesses, Networking No Longer Means Doing Business More Effectively--It's a Matter of Survival

By NICK WREDEN

For Eric Wise Jr., business operations manager at the Duplex Mill Manufacturing Co., networking is no longer a question of doing business better-it's more a matter of survival.

Wise credits networking, hands down, for keeping the $2.5 million family-run maker of materials-handling equipment in business.

"When a customer calls and says, 'I want a conveyor just like the one I ordered three years ago,' we can quote him a price in 10 minutes," Wise says. "Without the network, it would take us three days."

Kyle Westra, president of Westra & Co., a residential appraisal business, strikes a similar chord: "Networking lets me compete with the big firms downtown. For this reason alone, the network has paid for itself again and again."

With prices for 10/100-Mbps Ethernet network interface cards (NICs) down to roughly $90 a pop and almost as easy to install as a keyboard, small businesses are starting to buy in. Encouraged by low costs, ease of installation and the need to hook to the Internet, the small business market now mirrors the steep growth curve once seen among large companies, with market penetration roughly equal among all industries. According to IBM, small businesses-defined as companies with 100 employees or less-now represent nearly half of the information technology business worldwide.

And, IBM reports that small business spending on IT is growing at about 12 percent yearly, compared to a 9 percent clip at larger companies.

"The top driver for networking is the benefit of file and print sharing," says Davidpaul Lightner, a small business/home business analyst at Dataquest Inc. "These benefits really do bring down the cost of running a business over time."

Another important factor is the Internet. According to the American City Business Journals-the nation's largest publisher of metropolitan business newspapers-small businesses that use the Internet and similar technologies grow 46 percent faster than those that don't. The Internet creates a need for a single network on-ramp that can be shared by all employees.

Indeed, some companies now view local networks as merely an add-on to the value of Internet connectivity. "Every small business has to be connected to the Internet today, but [they] can't afford five separate lines for five separate employees," says Brendan Hannigan, an analyst at Forrester Research. "The Internet is becoming a stimulus to networking because small businesses can see the benefit of sharing external information internally."

Miles To Go

Even with the substantial growth in the small business sector, the U.S. Small Business Administration estimates that fewer than one-third of the nation's 23 million small businesses are currently networked. At the top end are businesses that use such bandwidth-intensive services as CAD/CAM, industrial design and publishing. Other companies have relatively few networking requirements, but install a network for printer-sharing because it's cheaper than buying multiple printers. Other strong motivators are Internet access and e-mail.

Small businesses, just like larger establishments, are finding that as they add increasingly complex apps, they need more speed to run them. As a result, 10-Mbps networking is the bandwidth equivalent of a 486 PC. Many businesses just getting started are immediately opting for 100-Mbps networks, while existing 10-Mbps networks are being upgraded to Fast Ethernet.

In a recent Dataquest survey, more than 60 percent of small businesses expressed a future need for 100-Mbps throughput. "Everything we do is high-stress. Right now is not soon enough for the pressure we're under," says Nicole Golladay-Pierce, vice president and CFO at Peter Jacobsen Productions Inc., a $15-million event production and sports marketing company.

The company began its networking journey in 1989 when the staff accountant hired an assistant and realized that the once-infamous "sneakernet" was an inefficient way to share data.

Now, the company's 40 PCs are equipped with Intel PRO/100 NICs on a Novell NetWare 4.1 network. Most of the PCs are Pentiums equipped with 10/100-Mbps cards, although "a few 486s with 10-Mbps cards are reserved for interns in the summer," says Gollady-Pierce.

The company also is adding an Internet server to expand Web access to all employees. All this networking has reaped substantial benefits: Sales have increased tenfold over the past decade, although the number of employees has only doubled.

Other companies report similar benefits. Action Graphics Inc., a $2 million prepress production house, paid back its investment in 100-Mbps Ethernet networking in only six months.

After adding Asante Technologies Inc. NICs to its Macintoshes and making other improvements in its network, Action Graphics enjoyed an estimated 20-times increase in the throughput of its graphics-intensive files-some of which range up to 750 MB each.

Despite the increase in productivity, production manager Gary Foster says networking "is the hardest investment to get senior management's approval for," because the time and other savings are incremental.

This wasn't the case at Duplex Mill. Although it started with an HP 100VG-ANYLAN, the company quickly phased out the product after it failed to become a standard. Now, the company depends on 3Com's Fast EtherLink 10/100 cards for 10 out of its 14 workstations.

The 100-Mbps throughput comes in handy when accessing the employee database that details the labor required on thousands of projects, or when working on graphics-intensive sales literature. A 56-Kbps leased line connected to the network lets professionals enjoy Internet access.

Duplex Mill has combined the classic advantages of networking with the newer benefits of digital photography. Workers take about 20 to 30 pictures per day with a Kodak digital camera. These photos-stored on the file server-are useful for enhancing quotes or for investigations when customers call in for troubleshooting. The photos also are useful for replications and training since employees can be guided by a picture as well as a blueprint.

The NIC Of Time

Market research company Cahners In-Stat Group confirms that 3Com and Intel are the 800-pound gorillas of the NIC market, capturing an overwhelming 75 percent of the business. For the second quarter, 3Com took 53 percent of the Fast Ethernet NIC market, followed by Intel's 22 percent. Other vendors include Accton Technology Corp., Asante, Aurora Technologies Inc., D-Link Networks Inc., Kingston Technology Co. and Linksys Group Inc. Cards are available for the PCI bus or for legacy ISA- or EISA-based PCs.

IntelliQuest Inc., a market research company, says most businesses look to match a current installed standard when selecting a NIC. Other reasons for selecting cards are reliability, performance and ease-of-configuration.

"We run two shifts daily at our firm," says Action Graphics' Foster. "We have absolutely no tolerance for downtime, and we can't afford anyone dedicated to technical support. Fortunately, we've been able to effectively ignore our NICs since they were installed."

Another way to ensure network reliability is by deploying bandwidth management software. IP Metrics Software Inc. and other vendors offer software that load-balances network traffic across two or more NICs. This eliminates the NIC as a potential point of server failure and increases the amount of data that can be pumped through the card.

And small businesses represent a big opportunity for NIC vendors. All the primary vendors have responded to small-business demands for reliability. Vendors offer limited lifetime warranties, bundled drivers, beefed-up customer support lines and simplified installation that makes linking a network easier than assembling a bicycle on Christmas morning. Asante, for instance, colors its adapters and plugs to match a color-coded network diagram. Other manufacturers include fold-out posters, installation wizards or simple tutorials to walk users through the setup process.

Recognizing the demand for "plug-and-play" convenience and a lack of specialized office space, some vendors are offering "networks-in-a-box"-integrated networking products that include NICs as well as hubs and switches that can be stacked on a bookshelf or desk and run quietly without fans. Intel has introduced its InBusiness family of networking products, which includes 10-Mbps and 100-Mbps hubs, switches and an Internet access device.

In another attempt to simplify networking for business users, 3Com and others offer a Fast Ethernet NIC with support for remote booting and other enhanced features that can be directly integrated into a PC or NetPC motherboard for use as a thin client.

This option is ideal for companies building their network from scratch. But the reality is that most small businesses looking into networking purchase stand-alone PCs one or two at a time. For them, the best way to maximize their PC investment is to install NIC cards.

At Fortune 1000 companies, networking became the tool that let independent departments share information-allowing the company to act as one. The same process is happening at smaller companies, and the impact is potentially even more powerful. Now, a networked business with Internet access can turn around quotes and process orders as fast as any Fortune 1000.

Networking can't turn a small business into a giant overnight, but try surviving without it.

Nick Wreden is a computer journalist based in Atlanta. He can be reached at aspen@mediaone.net.